Imperfect competition market is a market where there are one or several vendors who dominate the market or prices, as well as few buyers dominates a market or prices. Imperfect competition does not followed some rules of of perfect competition. When dealing with imperfect competition the equilibrium price can be influenced by the actions of agents. In imperfect competition the price of goods can increase above their marginal cost and thus have customers decrease their level of purchase, and so reach inefficient levels of production. The existence of the various parties that dominate the market or the price of goods and services will produce diversity forms of imperfectly competitive market. In general, the types or forms of imperfect competition markets is monopoly market, olygopoly market, monopolistic market, monopsony market, and oligopsony market.
Skechers Sdn. Bhd is the type of imperfect competition. Skechers Sdn. Bhd is company that offers a high-performance footwear brand. They designs, developes and market more than 3000 styles who are design for men, women, and kids. The company sells its footwear in department, speciality and independent stores, as well as more than 1100 company-owned Skechers retail stores as well as online business at skechers.com.the company’s success stems from it’s high quality, diversified, and affordable product line that meets consumers variuos lifestyle needs.
Based on the investigation that we made Skechers Sdn. Bhd use monopolistic competition to market their product. It refers to that market in which many producers produce goods which are close substitutes of each other. The number of producers is sufficiently large and each one of them produces goods which are similar, but not the same. The term used to describe this is product differentiation. This market we often meet when we visit the supermarket. There we will find a variety of forms, types and brands of similar but not identical. Physicall difference means that the product of one firm is physically different from the other product of other firms. Physicall differentiton is done through differences in materials use, design, colour etc. For example, Skechers, Adidas, and Nike are a footware brand that offers same product in market. Although all shoes have same functions which is to protect feet from injury, but every product produced by different manufacturers have the specific characteristics of their own product. Skechers use physically differentitiation product to compete with other footwear manufactures this can be proof when they offer a wonderfull design, comfort features, offered with variety of colors, and a low price etc.
In a monopolistic market, manufacturers have the ability to influence the price although the effect is not as producers of market monopoly or oligopoly. This ability comes from the nature of the goods produced. Because of the differences and characteristics of the goods, consumers will not easily switch to another brand, and continue to choose the brand even though producers raise prices. For example, the shoe market in Malaysia. A shoe is tend to be homogeneous, but each of it has its own special features. For example Skechers, which has comfort features and attractive design that can be used in various events whether formal or informal. While Adidas has the advantage with their high-quality product. As a result, every brand has loyal customers each.
Under monopolistic competition there is freedom of entry and exit. Thus under monopolistik competition it is found that both that features of competition and monopoly are present. For example, there are number of manufactures producing different brands of footwear like Skechers, Adidas, Nike etc. The manufacturer of Skechers has got the monopoly of producing it. Nobody can produce and sell footwear with the name Skechers. But at the same time their faces competition from other manufactures of footwear as their product are close subtitutes of Skechers footwear.
Firms under monopolistic competition market incur a considerable expenditures on advertisement and selling cost so as to win over customers. In order to promote sale firms follow definete-methods af competing rivals other than prices. Advertisemet is a prominent example of non-price competition. The advertisment and other selling cost by a firm that change the consumer’s wants for their product and attract more customers. For example, Skechers has appointed a Hong Kong actor and singer, Sammi Cheng as their official spokesperson brand to promote their new product named as Skechers Gorun.According to Sami this Skechers new product have attractive design and offers with more bright colors to increase the confidence and spirit of the wearer, this shoes are also equipped with sensor technology that responds to brain. Users will detect and correct reaction of the positions they run thus making the run more comfortable.